Fed Keeps Target Rate Unchanged, Yellen Sings “Tomorrow” For Balance Sheet Unwind

As expected, The Federal Reserve Open Market Committee (FOMC) kept their target rate unchanged at 1.25%.

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But The Fed announced that asset-shrinking (unwinding their $4.4 trillion balance sheet) would begin in October. Janet Yellen announced the balance sheet will be allowed to normalize, with reinvestments slowed/stopped starting in October. In fact, here is Federal Reserve Chair Janet Yellen announcing the date of the asset-shrinking.

The Fed’s DOT plot (green) is lower today than it was previously marked in gray) reflecting dimming prospects for rate increases in the future.

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BUT they are expecting a rate increase at the December FOMC meeting.

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cool

On the news, the US Dollar smoked!

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Janet Yellen announcing the balance sheet unwinding accompanied by Goldman Sach’s Lloyd Blankfein.

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